The International Air Transport Association (IATA) announced that it will offer digital currencies in the financial settlement systems it operates for the aviation industry.
The announcement was made during the initial briefing for the joint IATA World Financial Symposium and World Passenger Symposium 2024 ongoing in Bangkok, Thailand.
IATA senior vice-president for financial settlement and distribution services Muhammad Albakri declared that digitalisation has impacted numerous aspects of daily life, including the currency used in various transactions.
He said: “With the increasing use of digital currencies, it is imperative that IATA’s industry financial settlement systems adapt to support the needs of those using our services.”
The dawn of the digital Renminbi
The first digital currency to be offered is the digital Renminbi, which will be available in the China Billing and Settlement Plan (BSP) by the end of 2024.
Albakri said: “China is one of the most advanced countries in the world in the adoption of digital currency. Recognizing the trend, IATA’s China Airline Committee requested for the digital Renminbi to be included in the BSP. This is an important development and IATA will accommodate the digital Renminbi by year-end.”
IATA is also examining the potential to offer other digital currencies in its settlement systems based on the needs and requirements of the industry.
Regarding this, Albakri added: “The experience gained in introducing the digital Renminbi will help IATA in onboarding other digital currencies in the future,” said Albakri.
Additional currencies for IATA’s Currency Clearance Service
In July of this year, IATA added the Renminbi Offshore (CNH) currency to its IATA Currency Clearance Service (ICCS), bringing the total number of currencies handled by the service to 74.
The ICCS is IATA’s global cash management system. It enables airlines’ treasurers to repatriate their sales funds worldwide to their preferred nominated currencies. This results in an accelerated and improved working capital management and reduced foreign exchange risks.
Albakri said of the ICCS: “At the heart of the integration of the digital Renminbi and all other settlement system work is a need to serve the customer and adapt to their behavioural changes in payment methods. Payment should be seamless. A customer shouldn’t be frustrated by not having their payment method of choice available; nor should airlines lose out on deriving the proper value from their ticket sales.”
